Im a building contractor and own my home with a mortgage of course. I want to sell my home, take the profits and build a spec house to sell at a profit. Would I have to pay capitol gain tax on either of these sales? Or would the spec house be biz profits?
by 
Jkountz
ANSWERS: 1
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If you have owned your home for more than two years and lived in it as your principle residence for at least two of the last five years, the profit (as long as the profit is less than $250,000 if you are single or $500,000 if you are married and file your tax return jointly) on that home will be exempt from capital gains. If you build a house on spec and sell it, it doesn't matter where the money comes from, that would be taxable. You should check with your accountant; it would probably be better to title the home in the business name for tax purposes. However, you could conceivably do the principle residence thing every couple years: build the house, live in it for two years, sell it and do it all over again. One note: the amount of the mortgage on a home has nothing whatsoever to do with the profit you make when you sell.
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